Dismissal of older employees – a federal court ruling sets new standards

In the current federal court decision, the court concedes for the first time that its previous case law on age-related termination had been too absolute. The freedom of dismissal had been restricted.

When older employees were dismissed a few years before retirement, there was often a risk that the dismissal would be qualified as abusive and the employer would have to pay compensation.

In this ruling, the Federal Supreme Court has now confirmed its intention that it will not place the protection of older employees above the freedom to dismiss. It does not consider it sensible to further tighten the dismissal protection regulations for older employees, as they have a counterproductive effect on the labor market. Specifically, the case involved the dismissal of a 60-year-old managing director with 37 years of service.

Although the age, the number of years of service and the remaining time until retirement suggested an unfairness under previous case law, the Federal Court argued that the employee’s position within the company must also be taken into account.

The court also mentions that abusive dismissal cannot be assumed a priori on the basis of age and length of service alone. Particularly in the case of the dismissal of managing directors or persons with considerable decision-making authority, the employer has a high interest in a large degree of freedom of dismissal. Furthermore, the Federal Supreme Court also rejected the idea that the employee should have been warned in advance or confronted with the reasons for termination so that he could have improved his behavior.

The Federal Supreme Court has now ruled that abusiveness does not exist simply because the employer did not fulfill all obligations and did not behave impeccably. A termination is only abusive if it is contrary to good faith. (Source: BGE 4A_44/2021 dated 2.6.2021)